By Todd Spangler | Variety
Dave Portnoy said he bought back Barstool Sports, the brash sports and pop-culture media company he founded, from Penn Entertainment for “pennies on the dollar.”
In fact, Portnoy paid 100 pennies for Barstool Sports. That’s after Penn Entertainment, a casino and online gambling operator, paid a total of about $550 million to acquire 100% control of Barstool — just a few months before deciding to cut Barstool loose.
“Penn sold 100% of the outstanding shares of Barstool to David Portnoy in exchange for a nominal cash consideration ($1.00 dollar) and certain non-compete and other restrictive covenants,” the company disclosed in a 10-Q filing Wednesday.
Penn said in the filing that the deal with Portnoy for Barstool will result in a “pre-tax non-cash loss” of between $800 million and $850 million — inclusive of $705 million to $720 million in goodwill and intangible assets write-offs — related to disposal of the business, to be incurred in the third quarter of 2023.
Penn has the right to receive 50% of the gross proceeds received by Portnoy in any subsequent sale or other monetization event of Barstool. Portnoy said Tuesday that he will “never” sell Barstool.
“This structure is ultimately beneficial for Penn because it still benefits from the upside upon a sale of the asset but it’s completely off the books — Penn gets the tax benefits of the loss and it is not a shareholder on the company’s cap table.”
Shruti Gurudanti, Rose Law Group partner and director of corporate law
